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Ada and Abbie: The Difference Engines

Engineer Abbie Hutty’s job is to build a vehicle that will be sent into space to look for life on Mars. Things have changed a lot since Ada Lovelace became the first computer programmer 200 years ago, in a time when women weren’t supposed to study science.

Science can’t get very far without imagination – before we can create new things, we need to dream them up. But once we have the idea, we need scientists to actually create the fantastical devices from our imaginations. You can’t have one without the other.

Right now, a team of engineers is hard at work preparing to send a rocket to Mars – they have four years to get everything ready. Curiosity is what’s driving us: is there life on Mars? But what’s making it possible to actually go and find out is the work of scientists like Abbie Hutty. She’s a Senior Spacecraft Structures Engineer at Airbus, where she’s in charge of designing the body of the ExoMars rover. That’s the little car that will be sent on a nine month journey through space, before setting down on Mars to explore and look for life.

“I lead a team of specialist engineers, and together we design the structure, choose materials, do lots of testing, and make sure everything about the rover’s body will work perfectly on Mars,” says Abbie. When the rover gets to Mars there won’t be anyone to fix it if anything goes wrong, so it’s a very important job: “I have about 20 people working for me, and some of them are much older than me,” says Abbie, who’s just 29 years old – it’s unusual to be in charge of a team like this at her age.

Abbie’s position is even more unusual when you consider that most engineers are men. Out of all the people working in the STEM professions – that’s Science, Technology, Engineering and Mathematics – only 14 out of every 100 are women, according to the Office of National Statistics. But anyone can work in STEM: “I always liked making things,” says Abbie, when asked what kind of interests she had as a kid. “It didn’t really matter what it was, from biscuits to marble runs to knitting with my gran – I enjoyed the thrill of seeing an idea made into reality. I always liked science too: learning about nature, the world and the universe, and how it all works.”

Ada Lovelace, prophet of the computer age

Abbie got to where she is today by going to university: she has a degree in Mechanical Engineering. But things weren’t always so easy for women who were interested in the sciences. When Ada Lovelace was born in 1815, her mother decided she should learn about mathematics, which was an unusual thing to teach a girl at the time. Ada went on to become the world’s first computer programmer – that’s incredible when considering there weren’t actually any computers around. That meant Ada didn’t just have to come up with computer programmes, but she pretty much had to dream up the idea of a computer too.

When Abbie first became interested in engineering, some of her friends, and even some teachers, were confused. Why would a young girl want to become an engineer? Many people don’t actually know what engineers do, says Abbie: “A lot of them thought engineers were the same as mechanics, and thought I’d be fixing people’s cars! But I explained what I’d found out: engineering is all about designing new technology, and using creative and technical skills to make new things and solve global problems.”

That sounded great to Abbie, whose favourite subjects were art and design technology, plus she was good at maths and science.” She still remembers the moment when she saw on the news that British engineers were working on a mission to Mars, called Beagle 2: “I thought: ‘Wow! If engineers make cool things like missions to Mars, then I want to be an engineer!’”

200 years ago, girls would be told they were better off staying away from intellectual matters, but Ada didn’t listen. When she was 17, Ada met Charles Babbage, a professor of mathematics who’d invented a complex calculating machine called the Difference Engine. Fascinated, Ada wrote to Charles and asked him to be her mentor. This marked the beginning of a lifelong professional collaboration and friendship.

When Charles was working on a new calculating machine he called an Analytical Engine, he asked if Ada could translate a mathematical paper about it, from the original French. Ada took to the task with gusto, adding so many notes that the translation was four times as long as the original text. Ada’s proposed that the Analytical Engine could be used to read symbols, not just numbers, and that it could be programmed with code. Ada’s translation is now considered the world’s first algorithm for a machine, making her the world’s first computer programmer. Ada’s ideas were visionary: she understood that the machine could be more than just a fancy calculator – it could be an all-purpose computing device that could be used to solve all sorts of problems.

The poetry of science

Being good at maths isn’t enough to make a breakthrough like this – it requires a good dollop of creativity. Ada’s mother had been the one to insist she learn maths, but Ada had inherited an artistic temperament from the father she never met: Lord Byron, the famous, passionate poet. Ada herself called this powerful combination a “poetical science”.

Working on the ExoMars rover, Abbie has also found she needs to be creative: she collaborates with people from all over the world as they work out exactly how to push humanity further out into space. “I love seeing something that was once just an idea in my head becoming real and taking shape. Then, knowing that one day it will land on a planet that no human has ever set foot on, is just incredible!,” says Abbie. There’s a shortage of engineers in the UK so we need to get more kids interested – both girls and boys: “We have lots of big challenges to solve, like climate change, green energy, getting clean water to the developing world, reaching new planets. We want people who have had lots of different experiences and learnt different things to come together to solve these problems,” says Abbie.

Abbie admires Ada Lovelace for being very smart, and she also has a lot of respect for Donna Shirley, the engineer who led the team that built the Sojourner Mars rover. That was the very first robotic rover to explore another planet 19 years ago. “It’s a real shame that a lot of women scientists and engineers historically have not been recognised or remembered in the same way as men,” says Abbie. Everyone who works in computer technology now knows that Ava was a true visionary, but she was largely ignored during her lifetime. Many women never get re-discovered like Ava was, and this is a shame, says Abbie: “Inspirational women are an inspiration to everyone – not just girls. All of us are missing out on knowing about half of the inspirational people from history.”

Asked what she wants to do after the ExoMars rover is finished, Abbie says she wants to keep working on groundbreaking projects: “Now that I’ve had a taste of working on a mission to another planet, I don’t want to give it up!” Maybe that means working on other Mars missions: “But there are also missions planned to go to other interesting planets and moons in our solar system. Like the icy moons of Jupiter – we think they might have life in the oceans.” That’s the imagination part done – now we need more engineers like Abbie to figure out how to get us there.

Kash isn’t your average scrappy payment startup – the billion dollar retailers have already started knocking. We met with co-founder Kaz Nejatian in San Francisco, to talk about how this startup is gunning to replace credit cards.

At first glance, Kash could be mistaken for just another payment technology startup, although one with a particularly bold goal: to become the retail payment method of choice. Nothing about Kash’s offices in San Francisco’s SoMa district pegs the company as remarkable; as is the case for many of the City’s early startups, searching for Kash’s offices leaves you concerned you’re about to walk into someone’s flat. But no, this is the right place, says CEO and co-founder Kaz Nejatian as he lets me in, explaining how there are six Bitcoin companies in the building, which neighbours Pinterest and AirBnB.

In his hoodie and ‘Toronto Law’ t-shirt, Nejatian brings out water in mason jars as he explains how four people work for Kash in SF and three more in Canada – this count should double this year. But this is by no means a bootstrapped operation. Kash’s ambitious plan to become the retail payment method of choice has some big-name backers: first Y Combinator, then investors including Tim Draper and Green Visor Capital – and in September, former Visa CEO Joe Saunders joined the Kash board, alongside Square founding member Sam Wen. In other words: the Kash plan may be bold, but the talent pool is deep. Nejatian tells a compelling story, and after an hour in his company it’s hard not to get onboard with the excitement.

The quick and cheap alternative
The key to what Kash does, is letting people pay for things using direct debit: “We’re the only direct debit company in the US,” says Nejatian. “In the US, there’s no instant payment system that’s affordable.” The alternatives are the credit card networks, which are quick but expensive – or the Automated Clearing House network, which is cheap but takes several days. Kash adds an API on top of the banking network, which then allows people to log into their bank accounts and pay directly, at low cost. It’s all done and dusted in about two seconds.

This all sounds great, but still – getting people to change a behaviour as fundamental as credit and debit card payments is a tall order. It’s not like Kash is the first to have tried? Nejatian nods, eager to explain. First of all it’s easy: the payment is done within the browser, with no app required, and the technology is available to 93% of US consumers. The low rates are a key issue for merchants choosing Kash: instead of paying the usual 4-5% transaction fee to clear card payments, e-commerce merchants pay 0.5% with Kash. This enables them to either pocket the difference, or pass this saving on to their customers.

“We do incredibly well everywhere we’re deployed. We’ve just deployed across a major e-commerce retailer – our e-commerce product came out less than five weeks ago! On this e-commerce route, we do over 25% of transactions. In the first week there, we beat every brand of cards.” Right now, about 400 companies use Kash, with several more in the pipeline. In about three months, a “multi-billion dollar company” with physical outlets in fifty states will join this number – Kash can be used both online and in-store.

The reception from the established banking industry has been positive, says Nejatian: “There are banks that really like us, and we have big and small partner banks. But credit card transactions are the single largest source of revenue for American banks, so there are obviously banks that are nervous about that revenue going away.” Nejatian hopes to partner with more banks, but accepts it will take time. “The regulators here take a much dimmer view towards innovation [than in the UK]. It’s not as easy for banks here to say they want to have a fintech innovation hub that lets startups do whatever they want.” Nejatian shrugs; the Canadian national was previously a banking lawyer in New York, making it easier for Kash to navigate this issue.

The anti-fraud guarantee
Another appealing feature of Kash is how merchants are protected from chargebacks, which in the US can be significant. Then there’s how the technology boasts being highly resistant to fraud. Kash will cover fraudulent transactions up to $100k, says Nejatian: “But we haven’t had a single case of fraud.” Asked to explain how they’ve managed to create a system that makes this possible, Nejatian compares standard card payments to a game of Chinese Whispers: you swipe your card and it starts a chain: to the gateway, the bank, the network, and many more steps beyond:

“Instead, we have an algorithm that clears transactions, determined fraud, and moves money around. We use literally hundreds of factors to determine fraud, credibility, and creditworthiness. None of those factors we use are used by credit card companies.” Nejatian asks if I have a $5 note on me. “If I have the serial number that’s on your bill, I couldn’t spend that $5, right?” I look at the note in my hand. “But if I knew the 16 digits on your credit card, I could buy myself a Louis Vuitton purse tomorrow.” He laughs. “If you were to design a payment system today, you wouldn’t say, ‘Let’s clear money using 20 random digits!’ Because that doesn’t make any sense.”

Most of the security features in the Kash algorithm are kept secret – Nejatian will go as far as saying one of them is your IP address, but there are several dozen more. “We know information about you that your bank doesn’t know, and doesn’t want to know. … When we know those things, we don’t have to rely on numbers.”

A passion project
Having a catalogue of big name supporters to point to has been good for Kash as it pushes ahead with its ambitious goal. “But I think what makes us impressive to our merchants is when they see results. 80% reduction in transaction fees – that’s real to people.” Nejatian pauses. “I come from a long line of retailers. We moved from Iran to Canada when I was 12, and we had a corner store. I would go through our bank statements and look at credit card fees, and every month the credit card companies were making more money from my mom’s store than my mom was. Every single month. That’s true for most merchants in the US and Canada.” Nejatian was 14 years old when he decided he wanted to do something about this. “I’ve been thinking about this for a really long time! It’s nice to have a plug that a lot of people are using, and like. It’s having a real impact in the world.”

While getting small retailers onboard is Nejatian’s hobby, he knows full well it’s the billion-dollar chains that are going to make Kash a success. Progress has also been aided by the US’s recent migration to chip and PIN cards, which changed the landscape for card fraud by driving it online. “We honestly didn’t expect e-commerce [takeup] to grow as fast as it has,” says Nejatian. The company started in 2012, but the first few years were spent building the tech from scratch – the actual product is less than a year old. Even more amazingly, this growth has happened without a sales team, as it’s all been word of mouth. “But we’re building a payment company – it will take a while! I’ve waited twenty years to start the company. I can wait twenty more years for it to become a big company.”

The goal is to take Kash global: “The payment system is broken virtually everywhere. It’s bad in the US, but it’s terrible in Africa and Asia. … Moving money should be frictionless. Ideally moving money shouldn’t cost you. We have a long way to go.” Nejatian describes Kash as his mission in life, and considering his enthusiasm it’s hard to doubt his sincerity as he explains he didn’t start Kash to run his own company, but to make payments more affordable for people. “I want this to exist. I think we’ll be the ones to do it. But even if we’re not, I’d want this to exist.”

The Megabuyte Interview: Katie Potts
There’s a certainty about Katie Potts. Hints to this fact start long before meeting her, as people’s complimentary statements are accompanied by subtly raised eyebrows. The impression continues upon arrival at Herald Investment Management’s classic office on Charterhouse Square, where I’m asked to please move to the opposite side of the table: “She likes to sit on this side.” Enter Potts – she doesn’t usually give interviews, she mentions more than once, as the press usually wants tips and you run the risk of distorting the market. I nod, noting it down: no tips.

As the founder and lead fund manager of Herald Investment Management, Potts has built a career on spotting opportunities at the small end of the market. Potts established what’s now one of the few remaining dedicated technology funds in 1993, and it becomes immediately clear that this macro view has resulted in a staggering level of industry knowledge. It’s slightly intimidating at first, but there’s no need for concern: Potts is outspoken, yes, but she’s also completely devoid of pretense or bluster. She’ll ask your opinion about what she’s said, and what’s more, she’ll ask you questions if she suspects there’s something you may know. Both rare traits indeed, yet arguably vital factors in the art of understanding the big picture.

Speaking of overviews, I ask Potts if she thinks the technology sector is underrated in the UK. “We don’t have the big winners they have in the States,” she says, in what I’m learning is her typically practical and well-informed manner. The big winners in the US has not only made the sector more popular there, she says, but it’s also ensured more profits that can be recycled into ever-bigger dreams. There are signs of that happening in the UK, says Potts, pointing to the money going into the London venture market. “But for the people chasing the next dot-com: I’m not sure it’s what I call tech.” There’s no shortage of entrepreneurism, Potts is quick to add: “But speaking in the purest engineering sense, my suspicion is, a lot is digital media rather than technology. That’s more an extension of advertising or the creative industries.” But, I venture, there are startups writing their own stacks? Potts nods: there are gray areas. “But a lot of it, I think, is front-end rather than back-end. A lot of the companies we were looking at who’ve have raised money – things like [food delivery app] Deliveroo – it’s not tech!“

There are certainly UK startups with viable business models, says Potts. But she’s concerned that the decline of the old engineering giants that people would aspire to work for – Marconi, GNK, Ferranti, STC, Rolls-Royce – means we’re no longer training young people for the next generation of (true) technology businesses. Entrepreneurism may be compensating for some of this, but back to whether the listed UK tech industry is underrated, Potts has another point to make:

“[There’s been] a dramatic reduction of weightings by professional long-term investors, pension funds and insurance companies. They were good quality shareholders, because they had a long-term view and were responsible owners of shares.” This stems from changes in regulation, tax and accounting rules: “There are no longer tax incentives to own UK equities, from a dividend point of view. … Insurance companies are almost out of equities, because they have to apply a bigger discount rate for regulatory purposes.” Some of these consequences are unintended, adds Potts, but it’s nevertheless led to more short-term investment attitudes: “One shareholder earning 10% is better quality than 10 shareholders earning 1%. When you earn 10%, you don’t have a short-term trading mentality. You care about the business.”

Value at the small end
The holdings of the Herald Investment Trust, which Potts launched in 1994, include plenty of the usual suspect from the listed technology sector in the UK and abroad, as well as a good number of lesser known companies. “There’s better value at the small end, because there are so few people who play in this,” says Potts. Each holding makes up a very small percentage of the fund as a whole – in part because the market has become less efficient: “There’s a worrying shortage of co-investors. … Because of the money leaving the market, there’s been undue pressure to deliver short-term performance, at the expense of making sure you’re investing properly for the firm to be competitive in the long-term.”

Herald held its 21st birthday party in February, and Potts invited the companies who’d made her more than £4 million – there were 66 names on the list. “We had quite a good turnout!” The average holding period of those companies was 13.9 years. In terms of what she looks for, Potts describes herself as value-oriented: “I want to work out how big the market is, how quickly the company might grow, and also grow into a low PE. … Some people would think what I do is rather risky – investing in early-stage lossmaking businesses. But to me, there’s huge risk in buying something like Facebook, because the valuation is already $250 billion. That has to be quite a lot of downside! Whereas at a small rate, you can buy 10% in a company for £1 million. You can lose £1 million, but you could make £10 million quite easily.”

Looking at Potts’ experience from 21 years at Herald, plus several years before – does she feel this has provided a unique perspective to make investment calls? “There was the ‘02 bust, and the ‘08 bust – and we’ve had eight years of recovery.” She thinks about it for a moment. “From my perspective, it’s not frightening now. Even having had such a strong run, it’s not as frightening as it was in 2000.” She remembers the first quarter in 2000, feeling like her skills were redundant as the valuations made no sense to her. “I’d been taking money out of the market in December ‘99 and stocks had gone up 100% after I’d sold. It was pretty frightening, because my valuation compass didn’t work! But a year later, my sales in December ‘99 looked quite sensible after all. I don’t remotely feel like that now. PE valuations are sensible. What worries me more is the structure of the market, and the lack of quality shareholders.”

This is a concern listed companies share, says Potts: “I think that’s one of the [reasons] the quoted market is dying: management don’t like short-term pressures. Nor do they like the bureaucracy of reports and accounts that you have to produce as part of the regulatory framework.” I mention how several CEOs of private equity-owned companies have echoed this in Megabuyte interviews: the freedom to make long-term choices in a growth stage is often a key reason for choosing to be unlisted. “How interesting,” says Potts, asking for more details, and for specific company names. Herald has raised two VC funds too, but Potts isn’t doing another one – it’s been challenging to raise follow-on money, leading to heavy dilution. But it’s been a good exercise, she says, something every fund manager could benefit from doing: “I think there’s too much top-down fund management now, and not a lot of bottom-up.”

Winners and losers
Potts started her career at GNK, which provided her scholarship to study Engineering Science at Oxford. She spent five years at Baring Investment Management before joining the UK electronics research team at SG Warburg in 1988, where she made a name for herself in the industry. She won’t say too much about that though, nor will she volunteer anything remotely personal. But her modest recollection of establishing Herald in 1993 speaks of conviction and determination:

“I’ve always been passionate that smaller companies could offer more growth than larger companies,” she says, referencing her pre-Herald days as a broker. “I became a fund manager, thinking I would offer a vehicle to my clients who found it difficult investing in smaller companies. I raised the money from my pension fund clients.” Herald was created as a vehicle to mitigate the liquidity risk of smaller companies: “But that’s the whole point of Herald: you’re supposed to take a higher risk. But none of the losses have been noticeable to shareholders, because we have a diversified portfolio. We’ve made 10 times our money in far more stocks have have gone bust!” She laughs, but in a moment she’ll back up this claim with a torrent of numbers.

It goes wrong sometimes of course – not very recently, mind. But Potts can easily name her biggest losses: that’s Plasmon, which did large disc drives – they went bust; Ingenta, which is still in business as Publishing Technology; and MAID, which became Dialog – that was a £4million loss: “Those are my three worst-performing investments, engraved on my heart!” She laughs. “I’ve had other companies go bust, but not on the scale of £4 million.” The circumstances have been different each time, says Potts, but the most important factor is management: “There are certain people I wouldn’t invest in again, if I haven’t had a very nice experience. That’s why it does help, having experience and a track record and getting to know people.”

Equally, Potts knows the names of her biggest wins, which she’s happy to report are on a much larger scale. “The biggest profit is about £34 million – that’s Imagination Technologies so it changes every day.” Other big wins include Diploma, Telecom Plus, Autonomy, Advent Software, SDL, Northgate Information Solution. “I’m very proud of the fact that we’ve compounded at 17.6% a year in the UK over 21 years. We haven’t done as well in overseas markets, but I think people would be surprised how well we’ve done in the UK. … It shows we got the timing right, of selling in the bubble and buying back in the bust.” So in total, Herald’s assets have appreciated by £600 million after expenses, interest and dividends paid – about £500 million of this has come from the UK portfolio. This is on £95 million in raised capital, less £45 million in share buybacks, confirms Potts.

The patience approach
The original concept for Herald has been well and truly proven then, I say, and she nods: “Yes. But I was thinking that if we fund enough small companies, we’ll eventually have some big companies. It’s a sadness that although we’ve been successful at making money, creating jobs and saving jobs, our real money is being made by selling out rather than trading up.” Having said that, Potts thinks tech is a fun sector to be in: “You’re providing to every market: insurance, retail, the government, the consumer. There’s always some innovation, always something coming along.”

It’s important not to get too carried away with fashions, says Potts, whose ultimate advice is to not be too greedy. “But equally, some of my best returns have been made when I put some money into a company that’s gone wrong, but the case is still fundamentally valid. You have a chance to average, and then you have a worthwhile stake as it comes right.” Good companies will often disappoint a little at first, as fundraising is all about telling your story in the most appealing manner: “You just have to be prepared for things to take longer. I’m sensitive to how we are different from a lot of investors: we will regularly make investments that we expect to be dead money for a couple of years. … It takes time for real businesses to come through.”

FINTECH CITYThe hottest thing in the tech startup scene right now is finance. Because no one is better at fintech than London – not even Silicon Valley.

Is the London tech startup scene becoming a true competitor to Silicon Valley? The fact that we once called it Silicon Roundabout is a nod to how far-fetched that idea used to be. But it’s been a very, very busy decade around Old Street, and no one says roundabout anymore – this is Tech City. The Valley is still unsurpassed in terms of breadth and whitehot ambition, but London is catching up fast. Add that to the fact that London is a world class financial centre, and what do you have? The start of a British fintech boom that could make London one of the biggest innovation centres in the world.

“I don’t think that’s an exaggeration at all. It’s absolutely true!” Eileen Burbidge knows better than most just how good London is at fintech – she was the undisputed queen of Tech City long before becoming the new chair of Tech City UK, the public body promoting the London scene. Silicon Valley may have software expertise, says Burbidge, but it doesn’t have the financial expertise. In London, we have both: “What we have in London, is if you took Silicon Valley and put it in the same city as Wall Street. Then, add Washington DC for policymakers and regulatory departments. In London, we have that all in one city. And there’s no way any other tech hub can beat that.”

As a partner in early-stage venture capital group Passion Capital, Burbidge has backed fintech darlings such as GoCardless, DueDil, and Digital Shadows, and will speak in rapid fire about why her companies – and others beyond – have excellent prospects. Take the challenger banks Starling, Atom and Mondo, offering app-only current accounts. Passion has invested in Mondo, but as Burbidge is also the UK Government’s special envoy for fintech, she’s enthusiastic about them all: “There’s something to be said about the level of disruption this will introduce. … This is probably one of the biggest bets we’ve made at Passion.”

Enter big money
Venture capitalists made another big bet on London fintech this April, when peer-to-peer business lender Funding Circle raised $150 million in what’s one of the biggest VC deals in the UK to date. But this isn’t an isolated case: British VC tech investments reached a new high in the first half of the year, with almost $1.5 billion raised, according to numbers compiled by London & Partners. Funding Circle, and fintech peers such as Azimo, WorldRemit and Currency Cloud, lead the charge: fintech attracted $472 million in the first half of 2015, representing 40% of all the money raised in London.

This represents a possible gamechanger for the London tech scene: to be able to attract big money without having to go to Silicon Valley. One defining factor of London startups has typically been how they’re making money almost immediately, in part because “practical” UK startups like fintech attracts more paying customers than social media. But this steely focus on earnings is also a symptom of how the UK funding climate won’t tolerate the kind of high-risk ventures more commonplace in the Valley. Access to bigger funding deals is arguably vital if London is to grow bigger companies, as it will enable startups to focus more on strategy and expansion.

“A lot of what happens in start-up industries is based around the attitude of the risk capital industry. In a hard-driven financial services world, getting profitable in a short period of time is extremely important,” says David Slater, head of international business development at London & Partners, the Mayor-backed organisation working to promote the capital to business. Looking back to the funding environment five-ten years ago, Slater remembers how the London hub was known for having good companies, but investors just couldn’t trust their payday would come. With the recent surge in high-value deals, this is now starting to change: “Once you get into a cycle of not only risk capital coming in, but also there’s a way to get it out – that’s a big step change in the way our technology industries will grow.”

Slater is optimistic about the prospects of UK tech, even though he’s reluctant to draw direct comparisons to the Valley. Still, he acknowledges there’s plenty there to admire: “We’re trying to emulate the Valley in terms of their appetite for risk, creativity, quick execution, developing the right talent, and entrepreneurial spirit. But London is different,” says Slater, pointing to how UK technology innovation is less about social and more about things like education, retail, video games, and finance.

Right now, London is brimming with corporate-sponsored startup accelerators (several just for fintech), as corporations are increasingly embracing the disruptors. Instead of looking at newcomers as threats, incumbents are supporting them with cash and mentoring, keen to tap into fresh ideas. This is one of the reasons why Slater thinks London is the perfect test bed for tech innovation: “We have all sorts of well-established industry there. It’s ready, and even accepting of the fact they’re going to be disrupted.”

The deep finance bench
The fact that the government values fresh thinking in the financial sector is a vital factor behind the fintech boom. Gemma Godfrey, who’s currently setting up fintech venture Moo.la after previously heading up investment strategy at Brooks Macdonald, highlights how recent regulatory advances have driven change. “We have a very supportive regulator. We have new pension freedoms, and the Retail Distribution Review has provided transparency over the way people pay fees,” says Godfrey. She points to how the rise of the “DIY investor” has paved the way for online-only companies like Nutmeg to offer wealth management and pensions.

Still, there can be significant barriers to overcome for startups moving into a traditionally-minded area like finance. “If you’re trying to do something new it’s only natural you’re going come across hurdles. If it hasn’t been done before, you need to create it,” says Godfrey, adding how new financing models are currently co-existing with the old ones, but they need to be better integrated. The first steps in that direction came last year, when Santander partnered with Funding Circle to become the first bank to establish a referral system to an alternative lender. Along with the rise of new technologies, these kinds of collaborations makes Godfrey optimistic about London’s prospects for becoming the global leader in fintech. She’s less sure if we can expect to compete with the Valley in a more general sense: “But for fintech, and certain subsets of technology? Absolutely we can! It’s really exciting.”

Increasing support from the established financial sector has been key to the rise of London fintech startups. But there’s only so much you can do to force a tech hub to happen, says Eileen Burbidge – the change has to be broad and cultural. “Silicon Valley became the strength that it is, not because it had envoys and investment programmes. It produced companies like Google, Facebook, eBay, Yahoo and Apple because the overall environment supported it.”

Burbidge points to how London has over 300 of the world’s largest banks, and the UK has over 100,000 financial services knowledge workers. While there’s no shortage of 20-something CEOs in the fintech crowd, there’s just as many graying hairs – plenty of fintech founders come from traditional finance backgrounds. Burbidge attributes this in part to the effects of the financial crisis: “After 2008, a lot of people decided they wanted to set up for themselves, because they no longer had the safety net. They could take the risk to be more entrepreneurial.” The rise of corporate-backed tech incubators is also a reflection of how the world of finance changed after the recession: “Institutions that got crippled by the crisis realised they had to innovate, and become more agile and efficient in how they operate.”

Taking a global mindset
This is the natural time for the London startup community to step up to the next level, says Mark Pearson, co-founder of Fuel Ventures: “We’ve had everything evolve: funding, early-stage investors, mind-set.” Pearson launched Fuel Ventures following a crowdfunding campaign earlier this year, after selling his previous company, MyVoucherCodes, in a deal worth up to £55 million. One of Pearson’s goals with Fuel Ventures, an early-stage technology investment fund and incubator, is to nurture companies to compete on a global scale:

“You see a lot of companies coming out of the US with big ideas, with lots of funding on day one, before they’ve even proved anything. In the UK, we’re a lot more conservative. It’s much more about the numbers, and you have to be revenue-generative from day one. This can restrict people with the big visions,” says Pearson. The British model may result in fewer failures, but Pearson thinks we need to crank up our ambitions: “I’m all for revenue and profits, but if you wait too long and [spend too long] scaling, you lose the race globally.”

Thanks to technology and the internet it’s never been easier to take a global view, but Pearson is quick to point out how London has a few challenges to overcome if we are to catch up with the Valley. One is the sheer size of the US market: 300 million people with the same language, currency and culture. The UK only has a fraction of that. “Then to scale in Europe, we need to have multiple languages, currencies, regulations – that’s a challenge.” Having said that, Pearson sees no reason London tech companies can’t take on this task, as people are starting to think bigger: “Historically, UK entrepreneurs have been criticised for selling out to early. … It pains me that we don’t have a Google, Apple, Microsoft or Amazon from the UK. But let’s add some zeroes and some scale, and we’ll get there.”

There’s plenty of competition among mobile payments apps, but Michelle Songy thinks the hospitality sector needs a unique approach. We spoke to the co-founder of London startup Cake, which has a brand new recipe for paying restaurant bills.

It’s too early for the lunch rush at Comptoir Libanais yet, but when this place is busy there’s a queue out the door and down Berwick Street. And did you know the average bill in a UK restaurant takes 12 minutes to arrive? Michelle Songy, my companion for a mid-morning brew, is quick to point out that if you eliminate that wait in a place like this, which has over 20 tables, that’s hours saved: “Here, they served 500 more tables last month than they did before using the app.”

Songy is talking about the mobile payment app she co-founded, Cake, which I’ve just downloaded so we can share a tab for our rose-mint teas. There’s a lot of interesting things about Cake: it’s aimed at the hospitality industry, enabling diners to pay their bills directly from their phones. Cake links to the restaurant’s point-of-sale system, meaning there’s no need to wait. Where it gets even more intriguing is how the app makes it easy for groups to split the bill. Using Cake means no one will be left paying for someone who’s short on change, or having to compensate for that person who went home early but didn’t leave enough to cover gratuity.

Songy opens the Cake app on her phone. Now that I’ve signed up (one minute, including adding a bank card) she can add me to her tab. Once we’re ready to pay we can each choose what we had from our bill, add the tip percentage, and then the app triggers the card payment. I deliberately waited to sign up until I was in the restaurant, wanting to see if it would still be easy with patchy mobile data coverage, loud music and potentially impatient waiters, and I have to admit: the Cake app is pretty slick, and the Cake business is well thought out.

That last part is vital, because there’s not exactly a shortage on competition in the mobile payment space. Songy will admit this, sure, but when it comes to hospitality, Cake is in a niche: “When my co-founder Charlotte [Kohlmann] and I were talking through ideas for startups, we saw a gap in the market for payment in hospitality – the scene was growing so much then, and still is,” says Songy. This was back in 2013, before the pair started Spleat, the predecessor to Cake, early the next year. “We’d seen the likes of Uber, and apps for booking planes and hotels, so we thought – why not speed up the time it takes to pay a bill, and make it a much simpler process?”

Right now, Cake is rapidly adding users, with the numbers growing 20% week-on-week. There’s only 30-something restaurants using the app yet, but the company’s in line to have 100 up and running by the end of the year. In July, Cake raised more than £1.1 million on CrowdCube, overshooting their £800,000 target. “I think crowdfundng can be really good for B2C businesses, at least if they’re not too new,” says Songy, who’s also raised money from traditional investors. “It can make people feel they’re part of a company they like.” The big push now is sales and development: “[The money is] going into raising London to the next level. That means getting more developers, and more salespeople to sign up as many bars and clubs and restaurants as we can. We’re also looking into doing a few more pilots in other countries, for future expansion.” So the order is the UK first, then Europe, and then the US.

It’s a lot of work, getting the first restaurants 50 onboard, but Songy is confident it’s going to get easier. For one, it’s clear that people in hospitality talk to each other, so you get little clusters of places using the app – the discovery feature shows several close to where we’re sitting: “We’ve had to sell the restaurants on this, first and foremost. We have to show them how it works, that it’s efficient, that it saves them time and hassle. We need to show how people will be spending more money, how you can serve more people.”

One major element still to be added to the app is table reservations, as well as a loyalty feature: “That’s probably the biggest platform we’re building for the restaurants: that they can look at their data. … They can be learning more about their customer [demographics], and spending down to an itemised level. That’s important to us: working with the restaurants and figuring out what they can get out of it.” Having said that, app users can rest assured that not every sandwich shop in town will be given your email address. Cake is still looking at the legal issues around data sharing, but the idea is to create a bespoke marketing service.

Listening to Songy, it becomes clear there’s a lot to think about when building a hospitality app. This is a sector that’s seen less technology innovation, relatively speaking, partially because it’s very fragmented: “Half of these places are independents,” says Songy, indicating the restaurants up and down the street, “So you have to go into each of them, sign them up, teach them how it works. All the systems are different so you have to integrate each one. … I don’t think a bank’s going to go do that.” She says that last bit after I’ve asked why a bank or payment card provider hasn’t done this already. There are some straight-up payment apps out there, like the Barclays Pingit app, which you may or may not know can be used by non-Barclays customers too. “But Cake is at festivals and events. We do ground-up marketing,” says Songy, who’s not at all troubled by point-of-sale payment tech like Apple Pay: “We’re going to use that in our app. We’re not competing with them. If anything, it helps us.”

The biggest competitor to Cake may instead be companies like MyCheck and Flyway, which make bespoke white label apps for restaurants. “It’s a bit of a trend in the industry to have an app,” says Songy, adding it also has to do with data ownership. “But I think many people don’t understand the maintenance and cost to continually market and upgrade an app.” But, I ask, are people really going to want to have 50 different restaurant apps on their phones? Surely only Starbucks can get away with something like that? Songy laughs: “You should go tell them that!”

There are other benefits for restaurants getting behind a single app too. Using Cake actually means paying less for card processing: “We have really good rates, because we’re taking in the volumes from a lot of the restaurants together.” Then there’s the fact that the Cake team is highly focused on customer service: “I think part of the reason people choose us is because we have an amazing team. If something breaks down they call us” – as opposed to users having to troubleshoot first with the bank, then the payment terminal manufacturer, and then the phone connection. After all, Songy and her co-founder are both from the American South, an area known for good service: “We grew up with the best hospitality. You’d never be looking around for the waiter, waiting for the bill. You’re very taken care of! … We’re trying to make it less a payment app, and more an easy new way of doing things.”

Vital signs monitoring patch
One day, a little sticky patch for monitoring life signs may become standard for anyone who enters a hospital. That’s the hope for SensiumVitals from Toumaz Group, the British semiconductor company, which is currently undergoing clinical trials. “Our product is targeted not at intensive care, but at patients where monitoring is a manual process every 4-6 hours,” says Anthony Sethill, CEO of Toumaz. “We believe there are many clinical situations where continuous monitoring would be more effective clinically, and therefore economically.” For example, up to 30% of patients develop complications after gastrointestinal surgery. Being able to continuously monitor patients would not only mean catching problems quicker, but also that people could go home sooner and have vital signs transmitted remotely. Both these things are likely to increase patient comfort, and save money for the NHS.

Patient-controlled social networks
It’s not quite Facebook, but for people with Crohn’s Disease and other inflammatory bowel conditions, Crohnology.com is a lifesaver. Established in 2011, this network lets users trade information about symptoms and treatments. Crohnology.com is closely monitored by the medical estanlishment as an example of a patient-controlled social network, where people take charge of their own treatments. “This has very quickly become a global community of people sharing information about their conditions. They in turn talk to the clinicians treating them, and that has improved the dialogue globally,” says John Farenden, Director of EY’s ‘Let’s Get Digital’ initiative, which aims to support and accelerate the use of digital technologies in health and social care. “Using basic social media tools, this has made a huge impact on the lives of tens of thousands of people.”

Cancer-detecting garments
Talk about a literal interpretation of wearable technology: Cyrcadia Health has developed a bra that can detect cancer. The garment is embedded with patches that track changing temperatures in the tissue, which can be indicative of tumour growth. Early trials showed a 87% success rate in detecting tumours, including in dense breast tissue where small lumps can go undetected. The idea behind the garment is not to wear it all the time, but to to provide simpler and more comfortable screening methods than some of today’s more invasive procedures.

Home dialysis
It’s the Nespresso of dialysis: Quanta Fluid Solutions is developing a compact, portable dialysis machine that people can use themselves. This could be a significant money-saver for the NHS, as people could have dialysis in the comfort of their home. “A percentage of patients are suited for home-dialysis, once they’ve been trained. We know that would save the NHS about £15,000 a year per patient,” says Martin Hunt, a Director at the NHS’s National Institute for Health Research (NIHR). Hunt heads the NIHR ‘Invention for Innovation’ programme, a translational funding scheme aimed at advancing healthcare technologies. The NIHR, whose funds only go to companies with proof of concept after robust screening, has funded Quanta twice: “Research teams need to take into account not just the medical impact, but also how new devices can provide value for money,” says Hunt. “If you get better patient outcomes, generally speaking, there should be some associated cost saving along the clinical pathway.”

Nanotechnology targeting treatments
Sending microscopic devices into the body to treat illness in a non-invasive manner is a science fiction dream that’s quickly becoming real. Earlier this year, researchers at the University of California successfully delivered treatment projectiles into the stomach of mice, in an effort to explore whether we can do this to treat stomach problems like ulcers or gastritis. A similar principle is behind antibody-drug conjugates, which are already being used to treat patients: a molecule-scale payload of cancer drugs is delivered directly to tumour sites, leaving the surrounding tissue undisturbed.

3D-printed body part replacements
Earlier this year, 3D printing technology from Stanmore Implants was used to create a replacement pelvis for a patient who’d lost his to cancer. The new part could be made more precisely with a 3D printer than standard methods. Another UK company using 3D printing to create body parts is Fripp Design and Research: their technology can create soft tissue organs like eyeballs, noses and ears, all based on scans from the patient. “3D printing now allow us to create new body parts, so the technology is actually no longer the problem,” says Farenden. “The challenge now is how we make best use of it and improve the outcome and experience for patients, as well keeping an eye on cost.” In an effort to make the product more commercially viable, Fripp has become the first company to use 3D technology to print directly in medical-grade silicone.

Lab-on-a-Chip
Imagine a USB stick which contains a whole laboratory – this is Christofer Toumazou’s Lab-on-a-Chip. It may sound impossible, but the tiny device provides quick results to medical tests, and can analyse DNA within minutes. Without the need of a laboratory, Lab-on-a-Chip can reveal how large a dose a patient needs of a particular medication, or whether they’re at risk for genetics-based diseases like diabetes or cancer. The technology, now being developed by DNA Electronics, could one day mean doctors looking into our future to treat us, not just our past. “Tying the genome to different risks associated with cancer is likely to become increasingly significant,” says Sethill at Toumaz. (Toumazou is the founder of Toumaz, but the company is not involved Lab-on-a-Chip.) “You could then use the collected data to understand which drugs give the best results, using millions of data points,” says Sethill, who predicts Big Data and analytics will become increasingly relevant in healthcare prevention.

Tissue repair wands
On Star Trek, they called it a medical tricorder: a device that heals skin and bone instantly. Here on earth, Mark Bass at the Department of Biomedical Science at the University of Sheffield has created a small handheld ultrasonic emitter that accelerates tissue repair. It’s not quite sci-fi, but the device can reduce healing times by up to 30%. That means the patient is more comfortable, and there is less chance of infection. The researchers have been able to reverse certain healing defects caused by diabetes, age and congenital disorders, and hope to soon be able to prevent the formation of chronic wounds.

Video games for stroke rehabilitation
Therapy becomes play when necessary yet tedious exercises are made into a game. Looking to help stroke victims regain functionality in their arms and hands, Limbs Alive has created a Wii-style video game. Over 100,000 people in the UK suffer from strokes each year, and up to 80% never fully regain the use of their limbs. Therapeutic video games is a growing area for the NIHR, says Hunt: “We insist on patient involvement throughout the development process. It’s one thing to have a solution using a tablet computer, but for elderly patients with mobility issues, that may not work for them.” Effective video game therapies can mean reducing the cost of treatment, not to mention making a frustrating processing a little more fun, so the patient is less likely to give up.

Wearable pain relief devices
The relief of chronic pain is a big promise, but that’s what Quell does. This device from NeuroMetrix uses non-invasive nerve stimulation to tackle pain, kicking in within 15 minutes of putting on the device. A single charge provides 40 hours of relief, whether it’s back pain or nerve-related aches.. Quell was a hit at 2015’s CES, the consumer electronics tradeshow usually dominated by the newest phones, but there’s increasingly more crossover between mainstream gadgets and health, says Farenden: “Consumer technology businesses are pushing on with technologies to improve health, as we see with things like Apple Watch and Jawbone.” The jury’s out on whether the cost associated with these gadgets are actually translating to better outcomes: “But we will see people increasingly using those technologies to better understand their own health.”

Neville Davis knows what his happy place looks like: four chairmanships of private equity-run businesses, plus one non-executive directorship of a listed company, to keep his hand in. “That’s what I like the best, as it gives me the right balance,” says Davis. This was the shape of the chairman’s portfolio when we met on the last day of June, but since then, a vacancy has appeared: Davis has stepped down as chairman of Fourth, as part of its ownership change.

But on the scorching hot day of our meeting, his chairmanships are as follows: Fourth (hospitality tech), SecureData (cybersecurity managed services), Clifford Thames (automotive tech), Key Travel (a non-tech business), plus a non-exec directorship of Kalibrate (petroleum tech). We’re enjoying the view of East London from Broadgate Tower, where Davis has secured a meeting room following his previous appointment with financial services group William Blair. That’s about as much as I can say about what he’s been up to today, as Davis takes the confidentiality of his charges very seriously.

Having said that, Davis is very open when it comes to sharing his opinions about the role of chairmanship, if a little reluctant to provide examples from his companies. It’s a bit like naming a favourite child: “I enjoy all the businesses I’m involved in, so I wouldn’t like to single any of them out!” We agree to discuss Fourth, as it’s timely: ECI has just exited to Insight Ventures. “It’s a fantastic business. It’s a pure play Software-as-a-Service, has been from the outset. […] I’m really positive about where the business is, what’s been achieved, and what it will achieve,” says Davis. “The new investor is very supportive and dynamic, which is a great outcome for the business. That’s one of my core beliefs: everything flows from the business being successful.”

The PE advantage
This success also means Davis will be in the market for a new mandate, probably another PE-backed company. So why this preference? “From my perspective, the balance of work between governance and added value, if I can use that phrase, is much more attractive in a PE-run business. The amount of focus on governance is much less, and I like that.” This goes to how Davis views his role as a chairman: “For me, I enjoy the added-value component of being chairman more than the governance. Of course, governance is important! But in a quoted company, you will spend a greater proportion of your time and efforts on governance, and it’s not what I really enjoy.”

Another reason for the PE preference is that Davis likes working with companies with an EBITDA of £4-10 million, a scale he thinks is well suited for private ownership. “What’s attractive about PE is a unanimity of focus on making the business successful. You have a very straightforward relationship with your shareholder, and they’ll typically sit around the boardroom table with you. Everybody is largely invested in making the business successful in a straightforward, simple way.”

As Davis’ most recent appointment, Key Travel, isn’t a tech company, there’s clearly no sector bias. But there are some rules: “My background is B2B and I have little experience in B2C. I wouldn’t get involved in retail or banking, or something that’s a long way from what I’ve done. But to understand a different sector, like travel, doesn’t really take that much time, because you already have the core basics of what business is about,” says Davis. “Management is management, and people are people. The dynamics of human beings don’t differ much.” So Davis focuses on finding good people to work with, not to mention how it’s always fun to be in a dynamic market. “I look for roles I’ll find interesting. Take Key Travel: it’s an interesting business with an ambitious and strong management team, lots of potential. [Then there’s] the fact that it was slightly leftfield of my main area of activity – that made it particularly interesting for me.”

We talk for a bit about how Key Travel may not be a tech company but it has many technology elements, similarly to how sector lines blur for Fourth, whose technology is fully mobile-enabled. Speaking of technology integration, is that an Apple Watch on Davis’ wrist? Yes it is! Davis leans forward to show me. “It’s fun, I have to admit. My wife got it for me, for my birthday.” He demonstrates some of the features. “When I first got it I wasn’t sure about it. But since I’ve had it, I haven’t had it off!” Davis laughs, but the Apple Watch is a testament to a device refined, and turned into something that grabs you.

The Compel variations
Davis (60) and his wife Karen live in Hertfordshire, outside Royston. They have two daughters, a chartered accountant and a doctor, and a son who’s doing his A-levels. “Throughout my life, my family has been the most important thing to me. So when I haven’t been at work, it’s been mostly about family.” He likes playing sports though: a bit of tennis and skiing – although he’s quick to add that’s he’s not very good. The family goes on trips together, most recently to Europe to ski. He loves going to see plays too, especially at the National Theatre in London – it will always be brilliantly acted and presented.

Originally from Sunderland, Davis went to grammar school in the north-east before moving to Canterbury to study at the University of Kent. He’s a chartered accountant by profession: “I learned with one of the big London firms. But I never wanted to be an accountant, I wanted to be a businessman.” Davis joined the company which later became Compel in 1980, taking over as CEO three years later. “Yes, I’ve had a most incredibly boring executive career!” He’s joking, because his 27 years at Compel brought no shortage of action. The long tenure was a happy accident though, says Davis, initially brought about by the fact that the company served real coffee at the interview: “It was a big factor!” He laughs, but in 1980, having proper coffee marked the company as a modern, dynamic business.

Another reason why Davis chose the company was that he wanted to join a smaller business in a more senior role, rather than the other way around. First entering as the company accountant, he soon moved up to CFO. “Then an opportunity arose to become CEO. And I said, ‘Please, can I have a go at running the business?’” Really? That must surely be a very modest recollection of what happened? Davis relents, sort of: “Well, I said, ‘I think I can do this.’ And they gave me a go. It was tremendous! The business turned around and became very successful.” Davis took the company from £5m revenue to a peak of £300m, and led the 1987 management buyout and the 1994 IPO. He eventually left Compel in 2007, when it was acquired by 2e2. “The business changed a lot. Every point where I could have done something different, I thought, ‘What would be more fun than this? What would be more stimulating and satisfying?’ And so, I stayed.”

The chairman as chameleon
When it comes to learning how to be a chairman there’s no set route, says Davis, but in order to be successful, you need to have been a CEO. “But the job of a chairman is fundamentally different from that of a CEO! The transition from CEO to chairman is one of the biggest you can make in a career,” says Davis, adding how it’s probably bigger than the move from being a CFO. Davis’ first chairmanship was industrial equipment auctioneers GoIndustry DoveBird – an enjoyable learning experience, he says, although he admits he might not have chosen the role today. “But when you begin being a chairman, as is so often the case in business, you need to get some experience! So actually, I probably still would have taken the GoIndustry job, because it got me that chairman experience,” says Davis. “I now have an extremely clear view of what the role of the chairman is, which, frankly, I didn’t really have when I started out.”

Now he knows the chairman’s job is to help and support the CEO and the board make the company successful: “The relationship between the CEO and chairman is critically important. The CEO’s role typically lonely, and very demanding. A decent chairman could help you in a million ways: a shoulder to lean on or cry on, a mentor, somebody who stimulates you, somebody to talk to.” And make no mistake: that means being the kind of chairman each individual CEO needs: “So if the CEO wants to talk to you about something which is pretty trivial in the broad scheme of things, your job to be there. Of course, in the majority of cases, the CEO is talking about important things. But sometimes there’s something aggravating within the business, and who else is he or she going to talk to about that?” Davis shrugs. ‘The chairman needs to be a chameleon, and adjust to the needs of each business.”

I ask Davis if he misses being CEO and he thinks for a while – not because he’s unsure, but because he loved being a CEO, and the answer is still no. “The nature of the chairmanship means you mustn’t want to do what the CEO does. Otherwise you’ll be a really lousy chairman! […] You need to have got to a point in your life where you have done enough of that, when you are fulfilled and satisfied and you want to do something different.” He thinks about it some more. “I spent my entire executive career in one business and now, I have this wonderful plural existence. That’s partly why I enjoy it so much: because I am involved in lots of different businesses.”